In Paris at its regularly scheduled meeting on 02 Fenruary 2009, the Board of Directors of the World Federation of Exchanges (WFE) issued a statement on the short-selling bans implemented on many markets as emergency measures September 2008.

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On 18 September 2008 the SEC surprised the US financial markets by issuing an emergency order prohibiting the short selling of about 1,000 stocks of financial institutions from the NYSE, the AMEX, and the NASDAQ. Market authorities in the UK, France, Germany, and elsewhere took similar steps. The preamble to the SEC press release stated.

Short sellers still have a bad reputation. Pity, because they're better at exposing scams than the regulators In the inglorious history of the financial markets, Napoleon stands out-not for his retreat from Russia, not for the Napoleonic Code, but for his hatred of a species of speculator known as the short seller. The emperor had no use for cynics who felt that his regime and its bonds faced a dim future, and who bet against him. Shorts were "enemies of the state," he reputedly said.

believe that as an industry, we must act together to grasp this opportunity to reshape our economy towards a far more sustainable footing, based on the key characteristics of exchange trading: transparency, neutrality and liquidity. From my conversations with political leaders in London, Brussels and Washington I believe that there is recognition at the highest levels that this was not a crisis of equity or exchange trading.

The recent financial crisis has shown that clear lines must be drawn between protecting investors and allowing market participants to freely express their opinions of securities prices. Short sales directly benefit stock markets by supporting price discovery and enhancing liquidity, and indirectly by facilitating operations for the alternative funds industry. At the same time, outsized short selling during volatile times can unfairly damage stock prices and create systemic economic risks. This note aims to help define the line between investor protection and unfettered short selling, which to date has proven to be a substantial challenge for regulators and markets alike.